Here’s a libertarian’s angle on the Whitewater 2008 proposed budget. As I mentioned in my last post, it’s a cautious, competent budget.

In good times, a budget like this might make sense. Unfortunately, these are not good times for many of Whitewater’s families: the family poverty rate is higher here than in nearby communities. That’s the astonishing fact of life in a city that, by the appearance of her streets, looks better than ever.

The best medicine for an ailing municipal economy is less government spending, reduced taxation, fewer fees, and less regulation (regulation operating as a crypto-tax). The budget is only one of a municipality’s areas of opportunity: some reforms can be made through a budget, but others can be addressed only apart from typical municipal spending. Those other challenges include uncertain tax incremental financing schemes, counter-productive ‘smart growth’ strategies, and a regime of cumbersome regulatory hoops.

From a libertarian’s point of view, this is exactly the time – before a recession, but when the municipal economy is ailing – to reduce spending. The entirety of spending reductions should be passed on as tax relief. The amount of spending reductions might be based on a reduction of two current sources of revenue: (1) the tax levy, and (2) the fees that the city charges for permits, licenses, etc.

The proposed 2008 budget assumes an increase in the tax levy, but a reduction in the municipal tax rate. (The absolute level of levy increase rests on an increase in construction.)

These are relative matters, but a spending reduction in equivalent to five percent of the proposed tax levy each year for the next three would be a useful start. The levy currently stands at over two million dollars per year, so this reduction for the first year would amount to a reduction of approximately one-hundred thousand dollars. Over three years, the city would have spending significantly and noticeably less than 2007.

There is a second easy fix. An immediate reduction of selected city fees, license registrations, or permit charges, for businesses and consumers. This should be coupled with an agreement to forego any new fees without a super-majority agreement of the Common Council.

Both of these reductions in revenue must be offset through reductions in spending (a municipality or state government cannot run a deficit, lacking as they do the ability to issue currency).

The total cost of these reductions in revenue in these three years would be manageable. These estimated spending reductions, passed on as tax and fee relief, assume no lift in the city’s economy.

I am convinced, however, that they would create positive change in our local economy.

It’s never easy to see where cost reductions will take place. Hard as it may seem, I would suggest that these spending reductions be offset through a reduction in the municipal work force, with part — but only part — from a reduction in so-called neighborhood services and enforcement costs. There’s a double-gain by reducing there: (1) the city reduces spending, and (2) the city sensibly lessens a regulatory and enforcement culture that’s corrosive to individual liberty and economic growth. The push to increase Whitewater’s position as ‘nanny-city’ will undermine – not improve – life and property values. Our regulatory and enforcement culture does not improve neighborhoods; it burdens and inhibits liberty and growth. We cannot boost free-market real estate prices through code-enforcement diktat.

Now, I do not expect that anyone will take up either libertarian reform; in any given year, the need’s not so apparent. I do believe, however, that these proposals would do more to spur growth than the theory that municipally-financed construction will entice developers and spur growth. In time, I believe that it will become clear that the current course will not uplift enough people, and that a more reform-oriented (libertarian, to me) approach will be needed.

These are not only changes a libertarian might make for reform of the government and improvement in our economy, but they are feasible, simple changes in our budget. (I’ll have more on reform to tax incremental financing, Community Development, fines and penalties, and our regulatory culture, in other posts.)